Labour Force Trends in Major US Cities since 1990

I found an interesting dataset from Economic Research at the Federal Reserve Bank of St. Louis (known as FRED) while I was reading an article via Bloomberg on cities in the US and Canada that can be considered as viable candidates for Amazon’s second headquarters. The author of the article eliminates a number of key US cities like Pittsburgh and Chicago as candidates due to stagnant labour markets and poor fiscal conditions. Poor fiscal conditions in US cities/states (e.g., California and New Jersey) are not a big surprise to me as this has been a known concern for many years; but, stagnant labour markets in cities like Chicago and Pittsburgh? That took me by surprise! …even though the population of Chicago for example has barely grown in over 20 years, which influences labour force/market size.

Here is what Chicago’s Labour Force looks like since 1990 –
Chicago

And here is what Pittsburgh’s Labour Force looks like since 1990 –
pittsburgh

Both cities display fairly similar broader labour trends, with rapid labour force growth during the 1990s, followed by very little (if any) growth since the early 2000s.

New York on the other hand has experienced almost consistent growth of its labour force since the mid 1990s (but barely any growth during the early 1990s) –
NY

San Francisco and San Jose show interesting trends – clearly influenced by the Dot-Com Bubble, with each experiencing a severely shrinking labour force during the early 2000s –
SanFranSnaJose

Major Texan cities (i.e., Dallas-Fort Worth, Houston, San Antonio and Austin) all display consistent labour force growth throughout the entire period of study (since 1990). Shown below is Houston* –
Houstyon
* I’ve only chosen to show Houston because all the other major Texan cities display an almost identical rate of growth since 1990

And the chart below shows annual change in the labour force since 1990 for major US cities (the Labour Force in the USA has grown from about 125M to 160M between January 1990 and August 2017; at about 1% per year)  –
LabourMarketCHange

What is clear from the chart above is that the more established cities like New York, Boston, Los Angeles, Chicago and Philadelphia have all experienced the slowest annual labour force growth since January 1990. In contrast are the rapidly growing sunbelt cities such as Phoenix, Nashville, Miami, Atlanta, and almost every Texan city.


Labour force/market information provides a good indication of how attractive a particular place is to potential workers. The real question now is – which US cities will lead labour force growth in the next 30 years? Will it be the superstar cities like New York and San Francisco? Or could it be the mid-sized “18-hour” city, like Nashville or Denver? Or will the sunbelt cities continue to dominate in growth? I have no clue. But I can guarantee you Amazon is very interested in this as it will influence the location of its second headquarters.

 

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Ontario hit peak auto sales in 2016; 2017 could be even higher…

Over 820,000 cars and trucks were sold in Ontario last year (2016), almost doubling total motor vehicle sales in 1981. The chart below shows total annual motor vehicle sales since 1981.

Total Auto Sales

In fact, 2017 appears like it could be another record year for motor vehicle sales, with the highest number of cars and trucks sold in the first 5 months of 2017, compared to first 5 months of previous years.

If you break up motor vehicle sales by the two categories offered by Statistics Canada, you notice that sales of passenger vehicles have stagnated since the 1990s, while truck sales have skyrocketed since the 1980s (see figure below). Trucks, as noted in the chart comprise minivans, SUVs, light and heavy trucks, vans and buses.

Passenger and Trucks Sales

Growing motor vehicle sales should not be too surprising to anyone for a number of reasons –

  1. Ontario is after all, in North America
  2. The population of the province has grown considerably over the last decade. Some of the new residents are bound to be drivers
  3. The economy of the province has been performing well over the last decade, which means greater job availability, growing wages and stronger consumer confidence. This all translates into more auto sales
  4. Ontario is home to 5 major auto makers  and over 7 car assembly plants (Fiat-Chrysler in Brampton and Windsor, Ford in Oakville, GM in Oshawa and Ingersoll, Honda in Markham and Alliston, and Toyota in Cambridge and Woodstock)
  5. The logistics and warehousing industry is a big and growing contributor to the Ontario economy (especially with the rise of e-commerce), which generates need for trucks

Why this is so fascinating is because major cities all around the world are at the moment starting to aggressively plan for and facilitate other forms of transportation – namely transit and active transportation (i.e., walking, cycling, rollerblading, etc.). Both the City of Toronto and the Province of Ontario are for example making unprecedented investments in transit, cycling and walking infrastructure. And this is exactly the direction cities should be going into. However, auto sales in Ontario have barely been affected by these initiatives (not to mention the impact autonomous and electric vehicles will have on the existing auto industry and of course, cities). This isn’t necessarily a bad thing – we should absolutely continue to make major (and growing) investments in transit and active transportation, but it is clearly evident that the auto industry is far from dead.

 

Could the next global recession take place in 2018 or 2019?

Economic trends are very difficult to predict accurately – which is why they are sometimes wrong. What we do know however is that since World War 2, recessions have generally occurred every 5-10 years, following general business cycles.

Below is a chart I assembled that shows the unemployment rate in the Province of Ontario for every month since January 1976.

Ontario Unemp

The red line represents Ontario’s unemployment rate, while the grey blocks represent the duration of recessions since the 1970s. What is clear is that there have been 4 recessions, roughly 10 years apart from each other since 1976. During the recessions, we see the unemployment rate rising, with some fairly pronounced spikes in the early 1980s, the early 1990s and the recession of 2008/2009. Interestingly enough, the dot com bubble of the 2000s wasn’t as severe in terms of its impact on the unemployment rate in Ontario.

  • One positive trend I take away from this chart is the consistent and resilient recoveries following each recession
  • One potentially ominous trend I take away from this chart is that it appears like a recession is right around the corner, and could occur in 2018 or 2019

But as the first line of this article states, economic trends are very difficult to predict accurately, and I didn’t undertake any technical analysis to arrive at my assumption/prediction, therefore keep in mind that I could be wrong.